The operating activities of the DistIT Group (hereinafter referred to as the Group) are mainly operated by Electric Fuel Infrastructure Sweden 2 AB headquartered in Stockholm, Sweden, Septon Holding AB headquartered in Gothenburg, Sweden and Aurdel Sweden AB headquartered in Stockholm, Sweden. Operations are conducted in these companies or in their respective subsidiaries and in all Nordic countries.
The Group’s operations are affected by a number of risks that may affect the Group’s results or financial position to varying degrees. When assessing the Group’s development, it is important to consider relevant risk factors in addition to the potential for profit growth. Not all risk factors can be described in this section, but should be evaluated together with other information in this annual report and a general external assessment. The Group has decided on a risk policy that is continuously reviewed and, if necessary, adapted to the business and external factors. DistIT’s subsidiaries work continuously with risks and risk management with the goal of identifying and controlling the risks. This section describes risks that may affect the Group’s customers and suppliers, among others. Specifically, this can be external influences caused by, for example, natural disasters, wars and pandemics.
Risk management – comprehensive
In a global crisis situation, all priorities should be based on safeguarding people’s health and minimising risk spreading. Once this is taken into account, other issues come into play.
Global risks refer to global threats that directly or indirectly affect people’s lives and living conditions on Earth; climate change, other large-scale environmental degradation, extreme poverty and pandemics are among the biggest and most urgent threats affecting us today.
Strategic risks primarily affect demand and can be counteracted by changes in the cost base. The management, together with the Board of Directors, closely monitors the economic situation in order to be able to act quickly and adapt the business in the event of any economic changes.
Operational risks refer to the risk of processes, systems or organisations failing in some respect. By continuously working with corporate culture, visiting customers and suppliers and monitoring competitors, risks are reduced.
Financial risks refer to the risk of fluctuations in business results and cash flow as a result of changes in exchange rates, interest rates, financing and credit risks. Financial risks are managed in accordance with established procedures.
Globala risks
The world community today is exposed to global threats that can lead to a serious deterioration in the living conditions of billions of people.
Long-term sustainability, pandemics and war are examples of global risks. The Group manages these risks by following up, working continuously and in a structured manner and discussing the issues in the Board.
Strategic risks
Strategic risks refer to external and internal threats that affect the company’s ability to achieve its strategic goals.
Strategic risks include, among other things, negative publicity, risks related to acquisitions, economic developments and inflation.
The Group manages the risks by:
• Work actively with brand marketing. The Group continuously monitors all publicity surrounding the subsidiaries and brands for preventive purposes.
• Focus on their own acquisition strategy and evaluate it continuously and on an ongoing basis.
• Closely monitor the development of the economy. The Group’s customers are in several industries and can be both corporate customers and customers who sell to end consumers, which reduces cyclical sensitivity.
• Apply risk management related to budgeting by staying up to date in the outside world. By having access to the latest information, the company has a greater opportunity to assess risks correctly while at the same time an appropriate risk measure can be applied. This is in the form of keeping up to date on inflation, different interest rates and consumption costs to budget according to this data.
Operational risks
Operational risks are risks that affect various processes and systems as well as the organization.
Operational risks include, among others, regulatory risks, industry and market risks, risks related to product quality and product safety, dependency on key personnel and customers, dependency on inventory, competition, suppliers, environmental risks, intellectual property rights, lack of control, insurance risks, IT-related risks and disputes.
By continuously working with corporate culture, visiting customers and suppliers and monitoring competitors, risks are reduced.
The Group also works continuously and actively to limit these risks by:
• Closely monitor the development of the economy. The Group’s customers are in several industries and can be both corporate customers and customers who sell to end consumers, which reduces cyclical sensitivity.
• Apply risk management related to budgeting by staying up to date in the outside world. By having access to the latest information, the company has a greater opportunity to assess risks correctly while at the same time an appropriate risk measure can be applied. This is in the form of keeping up to date on inflation, different interest rates and consumption costs to budget according to this data.
• Continue careful product selection and close cooperation with current and future suppliers.
• Strictly comply with applicable laws and regulations to ensure that all activities are conducted in accordance with applicable rules, laws, and standards. New rules, laws and standards are followed up, analysed and, if necessary, measures are taken to ensure full compliance. Deviations are reported to the company management on an ongoing basis in accordance with decided procedures and policies.
• Provide an extended warranty period up to the lifetime of private labels. In the event of defects in product quality and product safety, the subsidiaries are required to replace or repair the damaged product.
• To create an attractive work environment with good development opportunities and to be a learning organization where knowledge and experience are shared between and by employees.
• To create long-term relationships with our current customers while actively working to acquire new customers.
• Have an active purchasing strategy based on long-term relationships with suppliers in Asia and Europe. Through these collaborations, we have ensured that we can meet customer demands for lower prices and increasing margins. Together with our long-term approach to both customer and supplier relationships, we have ensured our resilience in a changing market.
• Evaluate and continuously develop our quality criteria, which we ensure that our suppliers can meet through our internal processes. This is done, among other things, through frequent contacts and regular visits to them, together with quality assessments and quality tests carried out by third parties.
• Take measures through cooperation with the Group’s logistics partners and own reasonable measures to protect its warehouses from fire risk, water damage and theft.
• Establish an action plan based on the Group’s environmental policy, which includes environmental requirements for suppliers, products and services. The environmental policy is continuously monitored and updated in accordance with current environmental laws and regulations.
• Work actively with brand marketing. The Group continuously monitors all publicity surrounding the subsidiaries and brands for preventive purposes.
• Focus on their own acquisition strategy and evaluate it continuously and on an ongoing basis.
• Actively process and follow up own trademarks and domain names through, among other things, national and European trademark registrations.
• Have a broad competence and a good network of expertise and legal resources for handling disputes and arbitration.
• Have an ongoing review of all the Group’s corporate insurance policies and procure and adapt existing insurance policies to the ongoing business.
• Have their own resources that take care of the companies’ IT systems and their various functions.
Financial risks
Financial risks refer to risks of changes in changes in exchange rates and interest rates, as well as tax, financing and credit risks. Financial risks are managed according to established procedures by:
• Buy currency to minimize the short-term impact on earnings and at the same time create long-term room for maneuvers.
• Follow up the tax situation in connection with audits and through ongoing contact with the relevant authorities in the Nordic markets.
• Renegotiate interest rates on an annual basis. The Group’s loans are subject to variable interest rates. Ongoing dialogue and communication take place with creditors such as banks, financial institutions and bondholders.
• Use credit insurance as part of reducing credit risk. Credit losses have historically been low, but increasing competition in the industry has meant poorer opportunities for credit insurance for customers and slightly higher credit losses.